Life Ch1 Quiz - Completing the application, underwriting, and delivery of policy (15)

b) exchange of something of value by both parties.

In an insurance contract, consideration refers to? a) a legal capacity, b) exchange of something of value by both parties. c) abiding by the laws of ethics, d) an act by one party in exchange for a promise by the other

b) Aleatory

Over several years, a policyowner paid $10,000 in premiums for his insurance policy. When the suffered a loss, the insurance company paid out $50,000 in benefits. What characteristic of an insurance contract does this describe?

a) considered true to the best of the applicant's knowledge

Representations are statements made by the applicant that are? a) considered true to the best of the applicant's knowledge, b) guaranteed to be true, c) found to be false after further investigation, d) immaterial to the actual acceptability of the insurance contract.

B) One-year term option.

he dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the A) Paid-up additions. B) One-year term option. C) Paid-up option. D) Accelerated endowment. Incorrect! The dividend is utilized to purchase one year term insurance.

c level fixed

variable life insurance is based on what kind of premium? a) decreasing, b) graded, c) level fixed d) increasing

a) return the application to the applicant for signature

If an agent fails to obtain an applicant's signature on the insurance application, the agent must? a) return the application to the applicant for signature, b) send the application the the insurer with a note explaining the absence of signature, c) sign the application for the applicant, d) sign the application as an agent, stating that all the answers have been verified.

b) policy delivery date

If no receipt is issued at the time of application, a statement of good health is usually required at the time of? a) application, b) policy delivery, c) policy renewal, d) the paramedic's report

c) gradually increases each year by the amount that the cash value increases

The death benefit under the Universal life option B a) increases for the first few years of the policy, and then levels off b) remains level, c) gradually increases each year by the amount that the cash value increases, d) decreases by the amount that the cash value increases.

a) amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit

which of the following would be deducted from the death benefit paid to a beneficiary, if a partial accelerated death benefit had been paid while the insured was still alive? a) amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit. a) amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit b) there are no deductions taken from death benefits c) Penalty imposed for early withdrawal of the death benefit, plus the amount of earnings lost by the insurance company in interest income d) 10% federal death benefit income tax, plus the amount of the accelerated benefit.

B) ART Annually Renewable Term policy with a cash value account.

A Universal Life Insurance policy is best described as a/an A) Flexible Premium Variable Life policy. B) Annually Renewable Term policy with a cash value account. C) Variable Life with a cash value account. D) Whole Life policy with two premiums: target and minimum.

b) War or Military Service Clause specifically excludes or limits the insurer's liability for losses caused by war or active military service. If a life insurance policy does not have that exclusion, the benefits are paid to the beneficiary, as if the insured died of any other cause.

A life insurance policy does not have a war clause. If the insured is killed during a time of war, what will the beneficiary receive from the policy? ANothing, since the insured was killed as a result of a war BThe full death benefit CThe policy's cash value DA refund of premiums

c) on the date of the application

An insured submits the full premium along with a completed application, and the policy is issued 10 days later. When does the coverage begin?

d) a source of medical information to alert insurers to adverse medical history

The Medical information Bureau is? a) a government entity that reviews medical information, b) an association of physicians who write insurance rules, c) a directory of paramedical services and providers, d) a source of medical information to alert insurers to adverse medical history.

d) Application or issue date

When must insurable interest exist in life insurance? a) death of insured, b) policy delivery date, c) time of claim, d) application or issue date

C$100,000 The triple indemnity accidental death rider obligates the company to pay three times the face amount of the policy if the insured dies as a result of an accident. The death must be accidental and not contributed to by any other factors and must occur within 90 days of the accident. In this case, since the insured contributed to his own death, the triple indemnity rider is void, but the beneficiary will still receive the policy's death benefit.

The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive? A$0 B$50,000 (50% of the policy value) C$100,000 D$300,000 (triple the amount of policy value)

b) the death benefit can be increased by providing evidence of insurability

The policyowner of an adjustable life policy wanst to increase the death benefit. Which of the following statements is correct regarding this change? a) the death benefit can be increased only by exchanging the existing policy for a new one. b) the death benefit can be increased by providing evidence of insurability c) the death benefit cannot be increased. d) the death benefit can be increased only when the policy has developed a cash value.

c) insurance and cash account

What are the two components of a universal policy? a) mortality cost and interest, b) separate account and policy loans, c) insurance and cash account, d) insurance and investments

b) their premiums are lower

Which is generally true regarding insureds who have been classified as preferred risks? a) they keep a higher percentage of any interest earned on their policies. b) their premiums are lower, c) they can borrow higher amounts off their policies, d) they can decide when to pay their monthly premiums.

d) face amount

which policy component decreases in decreasing term insurance? a) cash value b) dividend c) premium d) face amount

d) increasing

A return of premium term life policy is written as what type of term coverage? a) decreasing, b) renewable, c) level, d) increasing

B) Upon conversion, the death benefit of the permanent policy will be reduced by 50%.

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT A) Upon conversion, the premium for the permanent policy will be based upon attained age. B) Upon conversion, the death benefit of the permanent policy will be reduced by 50%. C) Evidence of insurability is not required. D) Most term policies contain a convertibility option.

d) insured's best friend

All the following may have an insurable interest in the insured EXCEPT? a) the spouse, b) insured's children, c) the employer, d) insured's best friend.

a) 3 days

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained? a) 3 days, b) 5 days, c) 10 days, d) 14 days

DThe surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive. Correct! When the reduced option is written as "joint and 2/3 survivor," the surviving beneficiary receives 2/3 of what was received when both beneficiaries were alive.

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries? AThe beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time. BThe beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies. COne of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies. DThe surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive. Correct! When the reduced option is written as "joint and 2/3 survivor," the surviving beneficiary receives 2/3 of what was received when both beneficiaries were alive.

a) inform the insurance company

If the agent feels that there could be misrepresentation on the part of the applicant for insurance, what must the agent do?

AIncome for 2 or more recipients until they die. The Life Income Joint and Survivor option guarantees an income for two or more recipients for the duration of their lives. Most contracts stipulate that the surviving partner will receive a reduced payment after the other dies, although some will continue to pay the same amount. There is no guarantee that all the life insurance proceeds will be paid out.

Life income joint and survivor settlement option guarantees AIncome for 2 or more recipients until they die. BPayment of interest on death proceeds. CPayout of the entire death benefit. DEqual payments to all recipients. The Life Income Joint and Survivor option guarantees an income for two or more recipients for the duration of their lives. Most contracts stipulate that the surviving partner will receive a reduced payment after the other dies, although some will continue to pay the same amount. There is no guarantee that all the life insurance proceeds will be paid out.

c) coverage until death or age 100,

What characteristic makes whole life permanent protection? a) guaranteed level premium, b) living benefits, c) coverage until death or age 100, d) guaranteed death benefit.

b) face amount

What does "level" refer to in level term insurance? a) interest rate, b) face amount, c) premium, d) cash value

c) Coverage ends and the policy cannot be reinstated.

What happens when a policy is surrendered for its cash value? AThe policy can be reinstated by paying back all policy loans and premiums. BThe policy can be converted to term coverage. CCoverage ends and the policy cannot be reinstated. DCoverage ends but the policy can be reinstated at any time. Incorrect! Once the cash surrender value option is selected, the coverage is terminated and the policy cannot be reinstated.

BIt has the highest amount of insurance protection. Incorrect! Under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy. The duration of the new term coverage lasts for as long a period as the amount of cash value will purchase.

What is the benefit of choosing extended term as a nonforfeiture option? AIt can be converted to a fixed annuity. BIt has the highest amount of insurance protection. CIt matures at age 100. DIt allows for coverage to continue beyond maturity date. Incorrect! Under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy. The duration of the new term coverage lasts for as long a period as the amount of cash value will purchase.

d) risk selection and classification

What is the main responsibility of a company's underwriting unit?

c) to keep the policy in force

What is the purpose of establishing the target premium for a universal life policy? a) to pay up the policy faster, b) to cover all policy expenses, c) to keep the policy in force, d) to accumulate cash value faster

a) annuitant

When an annuity is written, whose life expectancy is taken into account? a) annuitant, b) beneficiary, c) life expectancy is not a factor when writing an annuity. d) owner

d) when the application is signed and a check is given to the agent.

When is the earliest a policy may go into effect? a) when the first premium is paid and the policy has been delivered b) when the insurer approves the application, c) after the underwriter reviews the policy, d) when the application is signed and a check is given to the agent.

c) to prevent terrorism activities through monitoring of financial transactions

Which of the following best describes the purpose of the USA PTRIOT Act with regards to the insurance industry?

c) consumer report

Which of the following includes information regarding a person's credit, character, reputation, and habits?

a) d) at the end of 20 years, the policy's cash value will equal $100,000.

Which of the following is INCORRECt regarding a 4100,000 20-year level term policy? a) the policy premiums will remain level for 20 years. b) if the insured dies before the policy expired, the beneficiary will receive $100000 c) the policy will expire at the end of the 20-year period. d) at the end of 20 years, the policy's cash value will equal $100,000.

a) An Agent

Which of the following is considered a field underwriter? a) An agent, b) An insurer, c) an adjuster, d0 a company underwriter

AInsuring clause

Which of the following policy components contains the company's promise to pay? AInsuring clause BPremium mode CConsideration clause DEntire contract provision

c) It will pay double or triple the face amount. Incorrect!face amount if death is the result of an accident as defined in the policy and occurs within 90 days of such an accident.

Which of the following statements is TRUE concerning the Accidental Death Rider? AThis rider is only available to insureds over the age of 65. BIt is only available in group insurance. CIt will pay double or triple the face amount. DIt is also known as a triple indemnity rider.

a) application

Which of the following would be the main source of underwriting information used by the company in the risk selection process? a) application, b) warranty, c) MIB report, d) attending physician's statement.

d) term rider

Which of the following, when attached to a permanent life insurance policy, allows the policy owner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members? a) accidental death and dismemberment rider b) guaranteed insurability rider c) change of insured rider d) term rider

a) option b

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? a) option b, b) corridor option, c) variable option, d) option A

c) single payment or period payments

Which two terms are associated directly with the way an annuity is funded? a) immediate or defered, b) renewable or convertible, c) single payment or period payments, d) increasing or decreasing

a) universal life

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? a) universal life, b) variable life c) decreasing term d) straight whole life

a the insured's premiums will be waived until she is 21.

a father owns a life insurance policy on his 15-year old daughter. The policy contains the optional payor benefit rider. if the father becomes disabled, what will happen to the life insurance premiums? a) the insured's premiums will be waived until she is 21. b) the premiums will become tax deductible until the insured's 18th birthday. c) since it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected. a) the insured's premiums will be waived until she is 21. b) the premiums will become tax deductible until the insured's 18th birthday. c) since it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected. d) the insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums.